1. Chapter 1 – Operations and Productivity

2. Introduction What – An introduction to Operations Management Where – In any business that wants to improve its productivity Why – Productivity is one measure of success in business

3. Production All companies produce something In the examples you gave of careers you would like to pursue, what would you be producing? The creation of goods and services

4. What is Operations Management? “Operations Management is the set of activities that creates goods and services by transforming inputs into outputs”

5. What are the Inputs and Outputs? A Sony TV Factory A Bank A Hospital A University

6. Why Study Operations Management? Study how people organize themselves for productive enterprise Study how goods and services are produced Understand what operations managers do Understand how operations management affects costs for an organization

7. Operations Management Breakdown Design of Goods and Services Managing Quality Process Strategy Location Strategy Layout Strategy

8. Breakdown Continued Human Resources Supply-chain Management Inventory Management Scheduling Maintenance

9. Framework of Business All businesses perform three functions to create goods and services: Finance and Accounting Marketing Operations and Production

10. Operations Management and Services

11. Goods vs Services Goods Resold Inventoried Measurable Quality Sales distinct from Production Services Reselling Unusual Difficult to Inventory Quality Difficult to Measure Selling Part of Service

12. Goods vs Services Continued Goods Product Transportable Location for Cost Easy to Automate Services Provider Transportable Location for Customer Contact Difficult to Automate

13. Trends in Services Your job Your parents’ job

14. Growth of Services 1850 75 1900 25 50 75 200040 50 60 70 1970 75 80 85 90 95 2000 Percent United States Canada France Italy Britain Japan W Germany 1970 1991 Services Industry Farming 250 200 150 100 50 0 80 %70 60 50 40 30 20 10 0 U.S. Employment, % ShareServices as a Percent of GDP U.S. Exports of Services In Billions of Dollars Year 2000 data is estimated

15. Mix of Goods and Services 0 2550 75 100 2550 75 100 Automobile Computer Installed Carpeting Fast-food Meal Restaurant Meal Auto Repair Hospital Care Advertising Agency Investment Management Consulting Service Counseling Percent of Product that is a Good Percent of Product that is a Service

16. Pure Service Pure Service: No physical product provided along with a service

17. Applying OM to Services Can be very difficult to apply operations management concepts to the service sector

18. Productivity

19. Productivity Definition Productivity is the ratio of outputs of an enterprise divided by its inputs Productivity = Outputs Inputs

20. Productivity Definition Outputs? Inputs? Productivity = Products and Services Labour, Material, Energy, Capital

21. Productivity Definition It is the function of Operations Management to improve the ratio of outputs to inputs – to make the operation more efficient. How?

22. Productivity Improvement Why measure national productivity? Only by increasing productivity does the standard of living improve Three variables: Labour Capital Management